This Company Has a Massive Opportunity In a Fragmented Market

Vacation rental management company Vacasa (NASDAQ:VCSA) is the largest player in its industry, but still only has a small fraction of its addressable opportunity. In this Fool Live video clip, recorded on Dec. 7, contributor Matt Frankel asks Vacasa CEO Matt Roberts to talk about the opportunity and how he hopes to scale Vacasa into a massive brand. 

Matt Frankel: Talk a little bit about this market opportunity, because I would have to think it is a very fragmented market. The reason I say that is because I know Vacasa is the biggest vacation rental management company. I can’t tell you who the number two is. It’s really tough for me to just think of another one off the top of my head at all. I have to think this is a really fragmented market.

Matt Roberts: It is a highly fragmented market depending on how homeowners choose to enter the market. For example, if they choose to do it themselves, which probably about half of the people would choose to do it themselves, then there’s fragmented by the number of homes in individual homeowners. The other way that people do it as a local property manager, there’s over 20,000 local property managers. They are pretty small in terms of the number of properties under management. Nobody, as you mentioned, is anywhere near the scale of Vacasa. We are by far larger than anybody else in the national, or the only scaled national platform for vacation rentals in the country.

Frankel: There are about 5 million vacation rentals in the U.S., how much of that could potentially become under Vacasa’s umbrella? I guess there’s a lot like mine who can’t use Vacasa because they’re not allowed to, for one reason or another, you’re not going to get all 5 million of them. But how big do you think you can scale from where you are right now?

Roberts: Well, as I mentioned, we’re 35,000 added that 5 million now, so less than 1% penetration. There’s so much runway for growth in front of us. I think we certainly have built all of our technology platforms and systems and processes to be many magnitudes greater, we could easily see ourselves at 10 times the size that we are today. That would still put us at a pretty low percentage of the overall five million homes. Clearly in with the business, if we do over $1 billion in revenue next year alone, 10X on your supply is going to produce some pretty powerful scaled numbers on the financials.

Frankel: I mentioned 5 million in the U.S., there’s about 20 million globally. I know in your presentation at least you’ve mentioned global expansion as a future channel. Is that a current priority or is that more off in the future?

Roberts: I’d say it’s like a midterm, not a current, but a midterm opportunity for us. The focus and certainly that the numbers in our near-term by 2023 forecast is all about continuing to execute our domestic market opportunity. We will go back into international markets; we really want to be set up for success and have our technology platforms even further developed than it is and capable of adapting to each local market’s requirements.

Having run a business with international operations on numerous occasions, there’s a lot to respect about the complexity and the challenges of running. It’s not like going from one state to another. There is a lot of differences in terms of labor laws and complexity and compliance. We want to put ourselves in the best position to be successful when we go back and enter. I like our chances quite a bit. The incumbent players in the international markets are characterized if you have any scale by pretty disparate technology platforms. It’s several larger companies that came together and then platforms are not necessarily modern and unified in their approach. We believe heavily that technology is the key to this whole business being efficient and scalable and adding value.

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